Other critics in the United States have said Watts' acting outshone her 21 Grams co-stars, Oscar winner Benicio Del Toro and three-time nominee Sean Penn.

Watts, who plays a reformed party girl and drug addict dealing with the death of her husband in the film, said she felt nervous by talk she and Kidman could compete for the top gong.

"It is very flattering to even be considered or talked about in that company but it just kind of makes me a little nervous and tense to even think about it," Watts, 35, said as she appeared at the film's Australian premiere in Sydney last night with boyfriend and fellow Australian actor Heath Ledger.

But she admitted she had joked with Kidman about the possibility.

"She has said 'oh you are going to get it' and I have said 'you are going to get it' to her but beyond that it is not a conversation because we both know it would just make us too nervous," she said.

Best friends since they met as teenagers in Sydney, Watts struggled to earn roles in Hollywood for more than a decade while Kidman's career blossomed.

Watts' break came in 2001 in director David Lynch's Mulholland Drive and she starred last year in The Ring, a horror movie that scored well at the box office.

With Kidman starring in three potential Oscar films - The Human Stain, Cold Mountain, and Dogville - this year, the two Australian actresses look likely to be vying for the best actress statuette at the Academy Awards ceremony in February.

Kidman last year took out the Best Actress Oscar for The Hours, and if crowned again will become the first actress since Katharine Hepburn in 1967-1968 to win consecutive best actress Academy Awards.

Meanwhile, Watts has also been tipped to star in a remake of King Kong with Lord Of The Rings director Peter Jackson.

"It is not confirmed but it is very likely," Watts said when asked if she would take the role.

But Watts added that she was looking forward to taking some time off, spending Christmas in Australia with her family.